Transcript Costs of international arbitration

Costs of
International
Arbitration
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Introduction
– Importance of Costs
– Significant expense as a percentage of total claim
– Important factor in risk and cost assessment of the claim
– Direct effect on settlement negotiations
– Important tool for arbitrators to sanction or encourage certain
actions
– Costs in investment treaty and commercial arbitration
– Difference in allocation
– Costs information harder to procure in commercial arbitration
– In both cases, allocation of costs remains inconsistent and
unpredictable
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Categories of costs
Arbitration Costs
 fees of the arbitral tribunal
 reasonable travel and other expenses incurred by arbitrators
 institutional costs (e.g. registration fees, expenses connected
with the hearing and other administrative costs)
Party Costs
 lawyer’s fees and expenses
 expenses related to expert evidence and witnesses
 [time spent by management and in-house counsel?]
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Costs – International Commercial Arbitration
– Important points to note:
– Impact of confidentiality on research
– A number of arbitral institutions use different ways to calculate
costs. For instance:
– Ad valorem administrative costs (i.e. based on the value of the claim)
or fixed costs irrespective of amount in dispute.
– Ad valorem arbitrator fees or fixed arbitrator fees or fees based on
hourly or daily rates.
– Higher degree of party autonomy means parties can work
together to cut down costs significantly
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Costs – International Commercial Arbitration
Institutional Costs when amount in dispute is US$1million*
Centre
One arbitrator (average) fee + administrative costs
Three arbitrators (average) fee + administrative costs
HKIAC
US $35,125
US $90,875
ICC
US $61,094
US $139,851
SCC
US $46,862
US $84,195
SIAC
US $47,084
US $124,364
Average Party Costs:**
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Average Claimant Costs: £1,580,304
Average Respondent Costs: £1,413,459
On average, claimants spend 12% more than respondents
Spent on:
 Legal fees: 74%
 Experts’ fees and expenses, witness fees, management costs etc.: 26%
*Source: Louis Flannery and Benjamin Garel, Arbitration costs compared: the sequel. GAR, 15 January 2013.
**Source: CIArb Survey of Costs in International Arbitration, 2011.
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Costs – Investment Treaty Arbitration
– Party Costs
– Average claimant costs: USD 4,437,000
– Average respondent costs: USD 4,559,000
– Tribunal Costs
– Average costs: USD 746,000
– Average ICSID costs: USD 769,000
– Average UNCITRAL costs: USD 853,000
– Interesting facts
– Successful investors are more likely to recover costs (53%),
than successful States (38%)
– Successful parties are much more likely to recover costs in
UNCITRAL claims (69%) compared with ICSID claims (36%)
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Controlling costs (1)
– Drafting the right arbitration clause
– Selecting the right arbitral tribunal:*
– Number (e.g. sole arbitrator if appropriate)
– Competence (choosing the right mix of legal and technical
expertise)
– Conflicts (avoiding disqualification)
– Time (ensuring adequate availability throughout the course of the
proceedings)
– Selecting the right lawyers and counsel
– Experience
– Time
– Good case management skills
*if not appointed exclusively by the arbitral instruction
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Controlling costs (2)
– Case management by parties
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Agreeing on a procedural timetable early
Complying with institutional rules and case deadlines
Agreeing on a list of key issues
Limiting the length of written submissions, avoiding repetition
Limiting disclosure by limiting requests and rounds of document
production
– Making appropriate use of technology (e.g. avoiding hard copies)
– Limiting witnesses to key persons
– Considering one independent expert
– Case management by arbitrators
– Organising case management conferences to give effect to the above
– Awarding cost-efficient behaviour and settlement offers in cost awards
– Delivering award/decision as per agreed timetable
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Questions?
These are presentation slides only. The information within these slides does not
constitute definitive advice and should not be used as the basis for giving definitive
advice without checking the primary sources.
Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term
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